TOTAL REVENUE COLLECTION AND DISTRIBUTION

Total government revenue

Total government revenue in Ethiopia comes from the following sources:

direct taxes, which include personal income taxes (including income from the sale of forest products) and land use fees;

indirect taxes, which include duties on trade and sales taxes on goods and services sold in the domestic market;

non-tax revenue;

external loans and credits; and

external grants.

The total revenue of the Federal Government (including external assistance) was over 7 billion Birr in 1994 and increased to over 10 billion Birr in 1999. A large proportion of this revenue comes from indirect taxes on international trade.

Table 14 Total revenue collected at the federal level

Year	Domestic revenue	External grants	Total revenue
1994	5,913	1,132	7,045
1995	6,966	1,097	8,063
1996	7,985	1,504	9,489
1997	8,298	1,273	9,571
1998	9,019	1,756	10,775

Note: all figures are in million Birr.

Total forest revenue collection and distribution

Currently, Ethiopia is a federation of nine regional states, plus two urban administrations that come under the control of the Federal Government (see Figure 1 on page 19). Before decentralisation, all forest revenue was deposited in the government’s bank account and the approval of the Ministry of Finance was needed before money could be spent on reinvestment in the forestry sector. However, the Ministry of Finance generally allowed the forestry administration to use a fixed amount of the forest revenue collected for forest development and conservation.

After decentralisation, control over forest resources was handed over to the regional governments. The forest revenue collected is now deposited in a special account opened in the National Bank of Ethiopia in each region. This money is put into the Consolidated Fund for each region and can only be used after authorisation by the regional council.

In general, forest revenue is collected from the following activities:

royalty fees from the production of wood in private and state owned forest resources;
license fees for the movement of forest products;
seedling sales and stumpage fees;
concession fees for harvesting non wood forest products;
sales of illegally cut timber; and
penalties for illegal harvesting.

Before decentralisation, most revenue collected from the forestry sector came from royalties and sales of wood products and the average level of revenue collected from these sources was around five million Birr per year (see Table 15). However, by comparing the revenue collected to the amount of wood produced, the amount of revenue collected was lower than would be expected from the amount of wood that was harvested. It is likely that a lot of forest products were harvested without any payment of forest charges due to poor control and the low number of staff working in the sector.

Table 15 Government revenue collected from charges on wood products at the central level before decentralisation

Year	Revenue collected (in Birr)	Year	Revenue collected (in Birr)
1985	7,506,753	1989	5,797,375
1986	4,124,276	1990	4,661,393
1987	4,052,419	1991	6,041,755
1988	5,950,823	1992	6,902,806

Table 16 Government revenue collected from the sale of gum and incense at the central level before decentralisation

Year	Domestic sales (in thousand Birr)	Foreign sales (in thousand Birr)	Total sales (in thousand Birr)
1988	3,908	3,366	7,274
1989	5,652	3,057	8,709
1990	2,779	1,174	3,953
1991	548	848	1,395
Average	3,222	2,111	5,333

Government revenue collected from the sale of natural gum and incense before decentralisation varied between 1.4 million Birr and 8.7 million Birr per year, with an average of 5.3 million Birr per year (see Table 16). Since decentralisation, the revenue collected from these sales has probably increased substantially. For example, in 1998-99, revenue from the sale of 20,672 quintals of natural gum and incense was 8,708,569 Birr in Afar Regional State alone.

The wildlife sector also generates government revenue from hunting for sport, the export of live animals, tourism and sales of Civet musk (see Table 17). This revenue is still collected at the central (i.e. federal) level. About 4.5 million Birr per year was collected from hunting between 1996 and 2000 and charges on the export of live animals contributed a further 2 million Birr to total revenue collection in the same years (note that the figures presented for these items in Table 17 are in US$ per year). It should also be noted that the administration is allowed to retain about 500,000 Birr of this revenue each year for reinvestment in the sector.

Table 17 Government revenue collected from the wildlife sector at the central level

Year	Revenue from Civet musk sales		Revenue from charges on other wildlife products and services
Year	Domestic sales (in Birr)	Foreign sales (in Birr)	Hunting fees (in US$)	Charges on the export of live animals (in US$)
1991	329,506	10,281	n.a.	n.a.
1992	980,070	10,778	n.a.	n.a.
1993	1,485,488	38,279	n.a.	n.a.
1994	2,035,134	63,954	n.a.	n.a.
1995	3,097,413	73,365	89,734	349,200
1996	1,851,624	56,648	779,635	191,200
1997	962,231	24,601	687,776	532,900
1998	3,233,336	84,826	734,925	519,130
1999	4,155,632	82,592	538,255	245,460
Total	2,014,493	49,480	566,065	367,578

Since decentralisation, total forest revenue collection is unknown for the whole of Ethiopia, although a little information has been collected from some states and is presented below. In addition, the amount of forest revenue collected depends on the amount of forest resources available in each state. For example, Oromiya Regional State has more forest and more capacity to generate forest revenue than other regions. In Oromiya, the average amount of forest revenue collected between 1994 and 2000 was over 5 million Birr per year (see Table 18). Furthermore, unlike other states, some of this revenue (about 80%) has been reinvested in the development and conservation of forest resources in the state.

Table 18 Government revenue generated from forests and wildlife in Oromiya Regional State since decentralisation

Year	Revenue collected (in Birr)	Year	Revenue collected (in Birr)
1994	4,492,932	1998	5,228,653
1995	5,817,233	1999	6,272,746
1996	4,779,607	2000	5,065,682
1997	3,639,498	Average	5,042,335

In Gambella Regional State, total forest revenue collection has been over 1 million Birr per year on average since decentralisation. Over 60% of this has come from charges on wood products and the remainder from royalties on the sale of gum and incense (see Table 19).

Table 19 Forest revenue collected in Gambella Regional State since decentralisation

Year	Revenue collected from wood production (in Birr)	Revenue collected from royalties on sales of gum and incense (in Birr)
1994	402,562	n.a.
1995	667,573	342,236
1996	725,308	370,818
1997	1,022,486	430,800
1998	570,540	437,338
1999	619,298	429,404
Average	667,961	402,119

The average level of forest revenue collection in Addis Ababa has been about 250,000 Birr per year since 1993. This revenue comprises: sales of forest products; royalty fees; seedling sales; and other taxes and charges (see Table 20).

Table 20 Forest revenue collected in Addis Ababa since decentralisation

Source of revenue	Year
Source of revenue	1993	1994	1995	1996	1997	1998	1999
Royalty fees	n.a.	n.a.	15,017	152,450	110,257	25,835	111,801
Sale of forest products	102,379	306,251	232,596	88,707	11,337	n.a.	n.a.
Taxes on non-timber forest products	57,633	67,372	25,557	49,609	n.a.	n.a.	n.a.
Sales of seedlings	n.a.	n.a.	202,484	21,231	53,231	11,976	33,177
Pass permits	72,200	23,461	n.a.	21,136	n.a.	n.a.	n.a.
Other revenue	1,005	2,092	n.a.	n.a.	1,350	1,792	1,470
Total	233,217	399,176	475,654	333,133	176,175	39,603	146,448

Note: this revenue is collected at the central level because Addis Ababa is one of the urban administrations that come under the control of the Federal Government.